So I think we’re playing a good balance of allowing consumers who want to spend a bit more on our products and brands to do so, while also making sure that consumers who have that affordability mindset remain in our franchise. So to that end, we’ve been managing pricing for 2024 well back in 2023. I suppose to kind of pull in practical terms, all of our markets have the pricing in place that we expected coming into 2024. Two markets in Europe will probably come a bit later in the year, which would be GB in Germany. But beyond that, we’ve landed in a pretty good place, both in terms of headline price and promotional pricing. And again, it’s a topic that’s sensitive for our retailers. We respect that. We’re proud that, we’re delivering a lot of value growth for them year-on-year more than anybody else.
So, I think we’re in a good place on pricing, which kind of comes back to what we’ve been talking about. And I think back to Ed’s point we see volume as being a bigger part of that story than in 2024 which I think is great.
Eric Serotta: Great. Thank you.
Operator: Thank you. We’ll now take our next question. And this is from the line of Charlie Higgs from Redburn Atlantic. Please go ahead.
Charlie Higgs: Yeah. Hi, Damian and Nik. Hope you are well, and congrats on the Philippines acquisition. I wanted to drill a bit more into the Philippines, but particularly on the margin point and how you see balancing margin expansion in the country but also the need to be very cognizant of ESG? For example, I think you said refillable was 45% of the mix today. Like does that have to come down over time to drive margin expansion in the Philippines? And how does that all play in with things like the extended producer responsibility on single-serve plastic for example in Philippines?
Damian Gammell: Hi, Charlie. No — I mean, straight answer is no we don’t see the need for refillables to come down. Actually, on a normalized level our gross margin on refillable is usually pretty strong, given the reusable nature of the bottle. So the challenges in the Philippines really go beyond any one pack size. Obviously, affordability is key. So we’ve got a pricing strategy there that recruits and retains consumers or GB is a big part of that. We’ve called out that on a gross margin level, clearly, we’ve had a headwind on sugar. It’s more expensive there in reality. So it’s not really a pack specific conversation. We see refillable as a big part of our future there. We also see a part of our future in Indonesia. We believe that will support margin expansion.
I think it comes back down to what we kind of talked about a bit earlier which is we see opportunities for efficiency and productivity in the supply chain. We see opportunities to bring some smarter RGM thinking particularly in key accounts. As we grow volume, we expect to get leverage on the P&L in the Philippines that will support margin expansion. We have got maybe a midterm opportunity around Zero Sugar. We’ve been pleasantly surprised at the success of that in Indonesia. So that’s something we’re going to bring into the conversation with the team in the Philippines. So overall I think the margin story will evolve but it’s certainly not an RGB issue. And we are clearly committed to our sustainability goals. So yeah, no plans to reduce RGB .
We believe it’s going to be part of that margin story going forward. As I said generally it’s got a better gross margin profile due to the refillable nature of the pack. So that will stay.
Nik Jhangiani: Yeah. And Charlie, there’s a bit of a technical or mathematical issue because in 2018 there was an excise tax introduced in the Philippines and that’s continued to increase. Remember, how we account for that that’s grossed up in revenue and grossed up in your COGS. So as that increases year-on-year it’s purely mathematical that your absolute gross profit will grow. But in margin percentage terms it just comes down, because of the fact that your revenue is higher and hence you get a mathematical element. Clearly, if you normalize for that, if you’re looking at performance over the years, there’d be almost a 500 to 700 bps improvement in that margin, if you start normalizing for that. But that’s the reality of the way we have to account for it. So just keep that in mind as you look forward as well.
Damian Gammell: But 6 is a good place.
Nik Jhangiani: There you go. That’s on the operating profit, yes.
Charlie Higgs: Should be glad. Operating profit. Thank you.
Operator: Thank you. We’ll now take our next question. And this is from the line of Simon Hales from Citi. Please go ahead.
Simon Hales: Thank you. Hi, all. I wonder if I could just ask a little bit more about the efficiency program that’s kicking in this year. You flagged the €60 million to €70 million of benefits in 2024. How do you think about the timing of that? Is it going to be a little bit more perhaps H2 weighted, given the changes you’re making? And then as we look forward into the remainder of the program, how do we think about modeling this going forward? Will it be linear delivery for the following sort of four years? Or is it fair to assume it’ll be a bit more front-end loaded to 2025 and 2026?
Nik Jhangiani: So to 2024, yes, it will be more second half weighted, the numbers that we’ve given you. As Damian said, we continue to look at ways to continue to drive efficiency and some of that obviously, does mean we just have to look at the way we do things today. Then as you go into 2025, 2026, 2027, I would say it is probably going to be more linear because there will be phasing of bringing in some of those programs and part of that will also be linked to our drive towards standardization and more digitization with the S/4 HANA implementation. So I would call currently that’s more linear but we’ll continue to give you more updates as we finalize the program.
Simon Hales: Okay. Thanks.
Operator: Thank you. And we’ll take our next question. This is from the line of Bonnie Herzog from Goldman Sachs. Please go ahead.
Bonnie Herzog: Hi, thank you. Hi, everyone. I actually had a couple of quick follow-ups from earlier questions. First on volumes. Just curious to hear how they trended during Q4 and then so far this year? And then second, could you comment on consumer elasticities? And if you’ve seen any changes of late, given either the challenging macro backdrop or maybe from some of the pricing you’ve put through? And then finally, maybe just a little bit more color on your business away from home versus at home and sort of how you guys see that evolving this year? Thank you.
Damian Gammell: Thanks, Bonnie. So quite a few follow-ups you got in there. That’s not bad for one question and as always. So volumes as you saw in the release improved in Q4. And I think if you strip out some of the one-offs that Nik alluded to held up really well. I think particularly compared to other categories. So I think we’ve enjoyed good volume performance. It has been a similar environment for the consumer over not just the last quarter or even in this quarter I think it’s been – we talked a lot about 2023 that that affordability mindset and cost of living pressure has existed. So we’re well into it. Volumes are holding up. For 2024, I would say it started in line with expectations. I think we’re excited about a couple of events earlier in the year this year Ramadan, particularly in Indonesia starting earlier and Eastern – and Western Europe is earlier.
So I think that’s going to give us good momentum coming out of Q1. We’re well set up for both of those big festivals and events. And then clearly as we look through the year, we know that as I mentioned few times, we have got an opportunity to hopefully enjoy a more reasonable summer in Northern Europe and that will certainly help on volume as we go through the second half of the year. That also plays into your last question. I mean, I think we see strong revenue growth in away-from-home and home. We see volumes holding up in home market. I think depending on the country you’re in, I think away-from-home volumes were a little bit under more pressure based on, obviously weather coming out of Q3. What we’ve seen away-from start strongly particularly in markets like Spain.
I have just been there recently and very, very strong growth in away-from-home. So we’d expect that to continue through the summer in Europe. And obviously, as we look at Australia and New Zealand again, coming out we also see strong volume growth as well. So yeah, Nik I don’t know if you want to add anything?
Nik Jhangiani: No. I would just remind you Bonnie, a lot of the work that we did, during and post-COVID realizing for a period of time we were just going to be a home business is how do we improve the profitability both for our customers and for ourselves in the home channel as well. So to Damian’s point, while we see good growth in both channels from a profitability perspective, that’s in some ways fairly neutral to us, which is a good thing, because we just want to grow where the consumer wants to be and where we can offer them a full range of great brands and packs.
Bonnie Herzog: Okay. Thank you.
Nik Jhangiani: Thanks, Bonnie.
Operator: Thank you. I would now like to hand the conference back over to Damian Gammell, for his closing remarks. Damian, please go ahead.
Damian Gammell: Well, thank you, operator. And again, thank you everybody for joining us. I know it’s a little bit earlier than usual for those of you in the US, so I appreciate you getting up a bit earlier, but for good reason, to hear about a great 2023. And on the back of that I just want to again, thank, all of my colleagues and our customers. As Nik pointed out, and as we’ve talked about today, we will continue to invest for the long-term growth of our business, both in terms of volume, revenue and in terms of the sustainability journey we’re on. We’ve got a lot to look forward to. It’s going to be a busy year at CCEP, both with the Philippines and some of those big sporting events that I talked to across all of our markets this year and the ongoing transformation in Indonesia.
We are well placed for 2024 and beyond. And now, as we’ve talked about our new family member the Philippines taking the number of markets we operate within to 31. So Nik and I, look forward to talking to you again next time, which will be to update you on our Q1 performance. Thank you very much.
